Sunday, 31 July 2016

As per reports, on 22 July 2016 a party of Chinese PLA soldiers entered Barahoti [Middle Sector] and a face-off ensued with Indian personnel that was eventually satisfactorily resolved.
*Barahoti Grazing Ground[BGG] is a gigantic amphitheater at about 13,000 ft. surrounded by much higher mountain ridges, except to the north-east, where the ridge is only about 1000-2000ft higher and contains a gateway to the BGG from the Tibet side through the Tun Jun La [Pass].
*Tun Jun La is not one of the six passes mentioned in the 1954 Agreement between the Republic of India and the People's Republic of China [PRC] on Trade and Intercourse Between India and the Tibet Region of China. Sensing an opportunity in 1954, since the pass was unmanned, the Chinese renamed it as Wu Je, occupied it and set up a PLA post there.
*As per a Chinese Note to GOI, the Tun Jun La [Wu Je] is "one days journey from Niti Pass;" but the Chinese have consistently refused to indicate whether BGG is north or south of the Niti Pass. This assumes importance since Niti Pass is one of the six passes mentioned in the 1954 Agreement.
* An Indian Army contingent led by Capt.[Now Lt-Gen] Baljit Singh had established in May 1962 that a stream flows south from the Tun Jun La and joins the Dhauli Ganga, leaving no one in doubt that the Tun Jun La is indeed the watershed in the area and it therefore follows quite conclusively that the BGG is well within Indian territory. It may also be mentioned that the BGG was the subject of correspondence between the British Indian government and the Tibetan authorities since about the 1890s.
*The Sino-Indian Agreement on Tibet was signed on 29 April 1954. From the time the Chinese occupied Tibet in 1950 till the signing of the Agreement, there was not even a single Chinese intrusion in the area. But on 17 July 1954, barely a few months later, the Chinese themselves intruded into BGG and protested to India claiming that Indian troops had intruded into Chinese territory.
* The significance of the Chinese protest lies elsewhere. On conclusion of the 1954 Agreement, Nehru had written to Chief Ministers that with this "indirectly the question of our long frontier is settled". On 1 July 1954, Nehru also instructed that from now on "all our old maps should be carefully examined and where necessary withdrawn....new maps should be printed...no un-demarcated territory be shown..as a consequence of our agreement the frontiers of India should be considered firm and definite and not open to discussion with any one".
* Actually what the Chinese were signaling was that not only was the Sino-Indian boundary not mutually agreed upon, but that its alignment was wide open and certainly not as Nehru had indicated.
*In June 1956, when Nehru proposed talks to settle the issue, the Chinese initially procrastinated, but eventually agreed. Despite every effort, the Chinese refused to give the co-ordinates of so-called Wu Je to determine its position.
*On 19 April 1959, both sides agreed not to send armed troops into the area. No military action took place here in the 1962 conflict. In 2000, it is reported that it was further agreed that even armed personnel would not enter BGG. The present incursion therefore seems to be a violation of this understanding.
* As earlier the significance of the present Chinese incursion, both by land and by helicopters, lies elsewhere. What they are now signaling is that the entire Sino-Indian boundary is alive; it is not dormant and that the dispute is not confined to the Western and Eastern sectors only. The Middle sector is in contention also. And if by publicizing the deployment of tanks in the Ladakh area, India is showing its intent; the Chinese are trying to indicate that they too have other options.

Sunday, 24 July 2016

When the news first broke that three Chinese Xinhua journalists stationed in India had been asked to leave by 31 July 2016 on the non renewal of their visas; the first thought that came to mind was that this was a rather un-usual step, considering that officials had been claiming a steady improvement in the bilateral Sino-Indian relationship. When times are normal, either the visas are renewed for a fresh term on request without much fuss or the agency concerned is quietly told that the host government would welcome a new incumbent. Both states conscious of the importance of their bilateral relationship, would readily accede to either of the options without further ado. That has not happened in this case.
*The Head of the Delhi Bureau of Xinhua, Wu Qiang reportedly told The Hindu that "No explanation had been given to them for denial of visa renewal". Several Indian newspapers have however quoted from informed "sources" that the three journalists were denied visas due to concerns expressed by security agencies. These concerns are not in the public domain.
*Indian newspapers also quote from "sources" that Xinhua was free to replace the three journalists with other fresh incumbents. Thus technically speaking, this cannot be termed as an "expulsion". The Chinese themselves frequently use this method, of non-renewal of visas, to remove recalcitrant journalists whom they feel do not "correctly" reflect the image of China in their writings. The recent case of a New York Times journalist and a Bloomberg journalist comes to mind; when they had dared to write about corruption at the highest leadership levels and about their family members in China.
*Nevertheless the question that still remains is: was this action and the manner in which it was executed against the Xinhua journalists quite necessary? There is no doubt that this is bound to reverberate in the larger context of Sino-Indian relations.
*The BRICS summit is due to be held in Goa from 15-16 October 2016 as announced by EAM and as indicated by her, India has laid out an ambitious program of activities at the Ministerial, Official and Technical levels throughout the period when the Chairmanship is held by India.
*Of the five BRICS countries, both South Africa and Brazil are in political and economic shambles with the leadership facing severe corruption charges. The Brazilian President has had to step down; the South African barely survived. That just leaves President Putin and President Xi Jinping of China.
*The involvement of President Xi Jinping is crucial for the success of the Summit as China plays a major role.
*PM Modi is due to attend the G-20 Summit in China in September 2016.
*Thus two very important high level encounters are due shortly between India and China at the summit level, where the entire gamut of the bilateral relationship would be under discussion.
* The question is: was this distraction of asking the three Xinhua journalists to leave at this critical juncture quite necessary? What if the Chinese take this action rather badly and retaliate by asking three Indian journalists to leave China? These actions would dominate the air waves for a long time.
*It would have been far more prudent, if JS [XP] in the Ministry of External Affairs had been tasked to quietly summon the Head of the Information Department of the Chinese Embassy in Delhi and request him to withdraw the offending journalists from the official state agency, Xinhua from India.
*None of this should have been allowed to come out in the public domain. Both sides could easily have come to an understanding on this issue before any action was initiated.

Sunday, 17 July 2016

That the Permanent Court of Arbitration [PCA] ruling would go largely against the Chinese was well known and therefore it came as no surprise when this was made public. That the image and self- esteem of the Chinese government has considerably diminished as a result of the ruling, is also a given fact. But what has not been sufficiently highlighted and has largely escaped public scrutiny, is that this ruling has also put the governments of US, Japan and Australia on a bind. All three of them have extensive and significant relations with China; and none of them desires to jeopardize or hinder these relations in any significant manner. Both the US and Japan have also successfully defied international court rulings in the past that did not suit them. Australia even went to the extent of raiding the offices of the Legal Representative of Timor-Leste in Australia to prevent them from filing papers before the international court to resolve their maritime boundary dispute. Trying to pin down China on the issue of upholding international court rulings has only resulted in highlighting their own behavior and shortcomings. It would indeed be jarring for them to be so painted as equal defaulters as China.
* The PCA ruling has posed severe strategic dilemmas to both the US and Japan. Let us consider the case of the US first. As the ruling has given an interpretation of Article 121, under which a four part test is recommended to see whether a land feature is actually a rock or an island; the same test would therefore, ipso facto, be applicable to US controlled land features. If this test is applied, particularly to the Pacific Ocean territories of the US, then the latter stands to lose 400,000 square kilometers of EEZ in Micronesia, as the Kingman reef can no longer be considered to be an island under the four part test mandated by the PCA ruling. Whereas an island is entitled to an EEZ with a 200 nautical mile limit, a rock or a high tide elevation can only claim a 12 nautical mile territorial limit.
*For Japan the PCA ruling is even more problematical. Japan has been claiming an EEZ with a 200 nautical mile limit based on ownership of the Okinotorishima [island]. But as per the PCA ruling and applying the four part test so mandated, Okinotorishima does not qualify for being considered as an island!Japan would thus lose a massive EEZ based on its claim of Okinotorishima as an island, that is situated about 1740 kilometers south of Tokyo. It would be a big set-back for Japanese maritime ambitions in an area immediately south of the main Japanese islands. Similar is the dilemma for Taiwan. It stands to lose Itu Aba, the largest land feature in the Spratlys.
*But the more challenging task that the PCA ruling has thrown up is this: Who is going to enforce these rulings? Would the mandate fall on the US, as the strongest power in the region or would it have to be a collective effort? If the idea is to enforce decisions as a part of a collective effort, then these are bound to fail; for there is no unanimity within ASEAN and even in the recent meeting of ASEM at Ulan Batore participating states from Asia and Europe failed to agree on a collective statement. In fact there is no mention of the PCA ruling. Even the EU statement issued, after many convulsions, simply "acknowledged" the PCA ruling!
* It thus is quite evident that if any heavy lifting has to be done, only the US has the capability and the capacity to do it. But will they? That is another question that requires a separate detailed examination. For the moment, there is no evidence that the US is inclined to take any unilateral action to enforce the PCA ruling. On the other hand, there are indications that the US would like to take a major diplomatic initiative to ease tensions not only in the region, but more importantly with China. Already the Chief of Naval Operations [CNO] Admiral John Richardson is in Beijing discussing with his Chinese counterpart, Admiral Wu Shengli, on how to diffuse the SCS issue. In the past one year, Richardson and Wu have had three video conferences on the SCS issue.
*What the US certainly does not want is to be presented with a fait accompli, by any state, taking a unilateral action to rile the Chinese un- necessarily and thus force the hand of the US. In this particular context, the US would watch very carefully the mercurial new Filipino President to ensure that he stays within limits.

Wednesday, 13 July 2016

As expected the Permanent Arbitration Court [PCA], set up under the UNCLOS dispute resolution mechanism, has given its ruling. And as widely expected it has gone against China, even though the latter had refused to participate in PCA deliberations. That the reaction has been vitriolic in China, was also a foregone conclusion. That the ruling has been described by Chinese officials as "a piece of paper" was also known; for the former State Councilor, Dai Bingguo had already publicly denounced it as such during a recent visit to the US.
* While the world watches with bated breath as to what is likely to happen next, as the two leading great powers in the region, namely the US and China, assess the situation; it would only be prudent to look at their bilateral relations just to understand the stakes involved.
*The Sino-US interaction is conducted not only at the highest levels, but there are 91 official mechanism for dialogue. There is the high level Strategic and Economic [S&ED] dialogue at the Secretaries level, but also a Governor's Forum and a Mayor's Forum. There are 41 pairs of friendly provinces and 202 sister cities. By 2017, people to people exchanges are expected to exceed 4 million. Sino-US bilateral trade volume is nearly US$561billion, with the Chinese holding US$1.3trillion in US Treasury Securities. China is the largest foreign holder of US securities at 21.2% of the total. Last year there are 194,000 Chinese students in the US and 20,000 US students studying in China.
*If one examines the scale of the Sino-US interaction, there is no doubt that both countries would lose very heavily, if a conflict situation over the SCS dispute were ever to arise. Logic would suggest that both countries would do their utmost to avoid such a situation. It would also suggest that both will work hard towards finding a modus vivendi that both can comfortably live with.
*The question that therefore arises is: What stance should countries such as India adopt over the SCS dispute ruling? It is, of course, easy to crow over China's obvious discomfiture given the way that China opposed India's application to join the NSG; but then is that prudent policy?
* Firstly, India "noted" the award, but did not "welcome" it as some hawkish elements would have wished. Secondly, India supported the freedom of navigation and overflight. Thirdly, India believes that states should resolve disputes through "peaceful means" without the "threat of force" and exercise self restraint and finally India urged all states to show "utmost respect for UNCLOS"; thereby indirectly upholding its findings.
* Indian policy makers have done a remarkable exercise in drafting a very measured and appropriate response that is neither bellicose nor accusatory, but stresses the essential elements of our position. India is the only major country that accepted an international court ruling, without any demur, when the question of the maritime dispute between India and Bangladesh was decided. All the others; the US and Japan have often demurred when ICJ rulings went against them. Australia refuses to take the maritime dispute between them and Timor-Lest to the PCA under UNCLOS for a decision, despite the latter's repeated requests to do so. The inference is obvious. Therefore, India's stated position on the SCS issue has considerable merit and also occupies the moral high ground, while at the same time preserving our essential interests.
* Even China will find it hard to criticize India's position.

Monday, 11 July 2016

Tomorrow on 12th July 2016, the International Tribunal set-up under UNCLOS is expected to make public its ruling on the SCS dispute that is widely expected to go against the Chinese. The Chinese themselves are resigned to such an outcome. The question that is uppermost in the minds of most people is: what are the Chinese likely to do? Will the cascading belligerent statements emanating from the disputants inevitably lead to some kind of a clash? Several very eminent strategic analysts have given their opinions, whilst these are no doubt very sound, but these opinions are all in the realm of possibilities. Why not let the Chinese themselves answer what they are likely to do? The most authoritative Chinese narrative so far has come from a person no less than Dai Bingguo, the former Chinese State Councilor [2008-13], who was also the Director-General[DG] of the Office of Foreign Affairs leading Group of the Chinese Communist Party[CCP] Central Committee and DG of the Office of National Security Leadership Group of the CCP Central Committee. This is what he had to say:
*It was the Chinese people who were the first to "discover, name, develop and administer" the islands in the SCS and that the Chinese government was the first to "peacefully, effectively and continuously exercise jurisdiction over the SCS islands".
*During the Second World War, these islands were illegally occupied by the Japanese, but under the Cairo Declaration and the Potsdam Proclamation these islands were returned to China. The US till recently "respected and recognized" Chinese sovereignty over the Nansha [SCS] islands.
*To be blunt, when the US says that it has no position on the sovereignty issue now; it amounts to "back-peddling".
*Since 1970, the Philippines, Vietnam and others have occupied 42 islands and reefs by force. These countries have carried out large scale construction and deployed armaments and taken "provocative " action on the high seas. Stand in China's shoes: would the US have tolerated such provocation?
*The final award of the International Tribunal is a "piece of paper". China will never accept imposition by any third party.
*Any country that tries to implement the award must remember that China "will not sit idle".
*Nevertheless, China stands for the peaceful settlement of disputes as this best reflects international law under the UN Charter and that negotiations and peaceful settlement is the only way forward.
*China has settled its land boundaries with 12 out of 14 countries with which it has land boundaries. Nearly 20,000 kms of boundaries have been surveyed and demarcated. The Sino-Vietnam maritime boundary in Beibu Gulf has been settled through negotiations.
*There is no fundamental clash of interests between the US and China in SCS area. This area can be turned into an area of co-operation instead of confrontation. People will not forgive if Sino-US co-operation built over 40 years is ruined by "misjudgment and mishandling".
* Quite clearly therefore, Dai Bingguo is emphasizing: "do not provoke us, for we will defend our rights". At the same time, the Chinese are pleading for restraint, negotiations and peaceful settlement and not to push them into a corner. It would therefore follow that if the status quo is maintained post the award, there is little chance of a conflict. But restraint would have to be exercised by all sides to the dispute.

Tuesday, 5 July 2016

With barely a week to go before the UNCLOS Arbitration Tribunal gives its verdict on the South China Sea[SCS] dispute, the Chinese authorities have gone on an overdrive to highlight their case on the dispute. But the question remains is anyone listening and is the PR effort having any effect on an international audience that China seeks to influence? While it may be problematical to address this question with any accuracy, there is no hesitation on the part of the Chinese authorities in pushing its soft power to promote its strategic objectives.
*The People's Daily has released on 1 July2016, a series of 10 English language videos on You Tube in which scholars from Malaysia, Singapore and China voice their opinions that largely reflect the Chinese stance.
* CCTV has posted a series of cartoons on its Facebook page, illustrating the history of the South China Sea.
*The Chinese realize that as compared to traditional media channels, the new media outlets have a much larger readership. Since the Facebook platform is open to diverse opinion, it gives the Chinese authorities a chance to assess whether their efforts are indeed influencing the intended targets.
*The Chinese are also hosting a series of seminars in different countries. Recently the Leiden University Grotius Center in conjunction with the Wuhan University Institute for Boundary and Oceanic Studies jointly organized on 26 June 2016 a seminar in which about 30 experts from Asian, African, European countries participated and exchanged views on China's position.
* Similarly another seminar is due to be held in Washington, jointly organized by the Chongyang Institute for Financial Studies and the Carnegie Endowment for International Peace. The main purpose of the seminar is to "explore" possibilities together with leading US think-tanks on whether the "disparities" that exist between the US and Chinese positions can be "minimized".
*It is the Chinese assessment that US and Filipino versions of the SCS issue dominate the public discourse. The principal objective of both countries is to "push" the Chinese into a corner by emphasizing that China does not obey International law!
* It is for this reason that the Chinese have been repeatedly propagating that the UNCLOS Tribunal has no jurisdiction and that China will under no circumstances compromise on its sovereignty. This was the line taken by President Xi Jinping in his address to Chinese Communist Party [CCP] members on the 95th anniversary of the founding of the CCP.
*The Chinese have also tried to discredit the high moral ground taken by the US, Japan and Australia by saying that they too have disregarded inconvenient international tribunal rulings. Examples have been prominently publicized.
*Whether the Chinese PR effort will succeed or not was best summed up by one of China's leading internationally recognized scholars, Shen Dengli, when he said that it all depended on whether China was able to present its arguments "reasonably". Nevertheless, he emphasized the need for China to participate even more in the international sphere. In other words, in the coming days we can expect a propaganda blitz from China on this issue.

Saturday, 2 July 2016

The presumptive candidate for the Republican nomination for the US presidential election due later this year, Donald Trump, had this to say about the alleged currency manipulation by China: "The wanton manipulation of China's currency is robbing Americans of billions of dollars and millions of jobs". Even though this is clearly campaign rhetoric, yet the charge, if true, is a serious one and needs to be looked at very carefully. Therefore what are the facts and what is the fiction?
* The exchange value of the renminbi [yuan] is fixed each morning by the People's Bank of China [PBoC] within a narrow band of 2%, up or down, and within which market forces can have their say. This exchange rate is fixed primarily against the US dollar, but also against a basket of 13 currencies. Clearly therefore the PBoC controls the exchange rate.
* China is not the only country that does so. Well over half of the 189 member countries of the IMF fix their own respective exchange rate. About 26% of IMF members have currency boards and about 4% fix the rates by fiat. Some, including India, allow a floating rate with governments buying and selling as required. In the case of India the RBI intervenes where ever necessary. Only a few allow a free float with minimal state intervention.
* The truth is that since 2005 the Chinese yuan has massively appreciated against the US dollar. In 2005 the yuan was 8.27 to the dollar and in 2015 it was 6.1 to the US dollar. This happened partly due to massive western, but mainly US, pressure on China.
* This 36% appreciation means that some Chinese exports have become un- competitive; leading to displacement of the local economy, including transfer of some low value industries to Bangladesh and Vietnam. The Chinese economy has suffered due to the fact that wages and prices have as a result appreciated.
*On the other hand, look at the case of Japan. The Japanese currency, the yen, is allowed a free float; but in 2012 it was allowed to depreciate by a third against the US dollar as a part of Abenomics. No one in the US Congress, or for that matter any US politician, derided the move since Japan is a friendly country.
* Often the theory is propounded that if a currency is depreciated, it would lead to a surge in exports. Maybe true, but maybe not. From 2004-14 the US dollar depreciated against the Chinese yuan by about 25% and yet the US trade deficit with China blossomed from US$ 161.9 billion to US$ 342.6 billion!
* Therefore Trump's accusations are at best campaign rhetoric or at worst disingenuous, for as the Wall Street Journal put it " If Zhou Xiaochuan [PBoC Governor] is a currency manipulator, then Janet Yellin [US Fed Chief] is an interest rate manipulator". The truth, as always, lies somewhere in between!